Anemic consumer spending for August; incomes fall

Even with back to school spending in high gear in August, consumer spending was sluggish. Economists say that the first drop in incomes since October, 2009 probably had a lot to do with that. Reuters: The Commerce Department said on Friday spending rose 0.2 percent, in line with economists' expectations, after increasing 0.7 percent in July. When adjusted for inflation, however, spending was unchanged after rising 0.4 percent in July. Consumer spending accounts for about 70 percent of U.S. economic activity, so the flat inflation-adjusted reading adds to a picture of shaky GDP growth. Income slipped 0.1 percent, the first decline since October 2009 and contrasted with economists' forecast for a 0.1 percent advance. Private wages and salaries dropped $12.2 billion after increasing $23.8 billion in July. "What you're basically getting is a scene where consumers are losing momentum, they're losing momentum on income and as a result of that they're slowing down on spending," said Steven...(Read Full Post)